The Case for Buying Netflix Stock

Netflix (NFLX) stock has faced considerable pressure so far this year. Shares are down about 23% year-to-date (YTD) and are currently trading around 42% below their 52-week peak. One of the primary issues weighing on investor sentiment is concern about the streaming giant's engagement trends.

Concerns about declining viewership for second seasons of Netflix series raised questions about the platform's ability to sustain engagement growth, especially amid heightened competition. At the same time, concerns about the strength and consistency of Netflix's upcoming original-content lineup have contributed to expectations that engagement could soften further.

Adding to the negative sentiment, a Wells Fargo analyst recently downgraded Netflix stock to a "Sell." The downgrade was based largely on expectations that the company could experience a slowdown in engagement growth.

Concerns over Netflix's engagement levels have raised questions about whether slower growth in viewing hours could affect the company's financial performance. However, management argues that viewing hours should not be treated as a direct proxy for revenue or profitability because different content generates different levels of economic value.

Live programming illustrates this distinction. Although live events are expected to account for only around 5% of Netflix's 2026 content expenditure and approximately 1% of viewing hours, their strategic contribution extends beyond consumption. Management highlighted their ability to attract new subscribers and support monetization and advertising. This suggests that relatively low viewing volume can still translate into significant commercial value.

The available viewing data also provides some evidence that engagement itself has not deteriorated materially. During the first half of 2026, Netflix reported a 2% increase in viewing hours, equivalent to roughly 1.5 billion additional hours compared with the corresponding period in 2025. This represented a modest acceleration from the 1.5% growth recorded in 2025. This suggests that the platform continues to expand consumption rather than experiencing an outright contraction in viewing activity.